How to Compare Payday Lenders

• Family and Friends – It might be better to borrow money from someone you know personally. Usually, this means a family member or a good friend. This way, you can get an easy, interest-free loan. This isn’t the best choice for everyone, though. Involving friends and family in money issues can prove to be very problematic in some instances. Sometimes it’s better to pay to borrow money from a stranger rather than jeopardise a family relationship or close friendship.
• The Bank – Borrowing from a bank is a very good option. Bank loans, however, are difficult to get accepted for. People who are in need of emergency funds from a payday loan usually can’t meet the requirements for a bank loan. That’s because banks don’t usually deal with emergency lending like payday lending. Specialist companies, like Cashfloat, are better for this type of borrowing.
• Credit Cards – Borrowing money on a credit card could be a viable alternative, and credit cards are usually cheaper than payday loans. However, there are various disadvantages to credit cards. If you don’t have one already, you’ll need to apply and wait to get one. Payday loans are instant and have a high acceptance rate. You might not even be accepted for a credit card. As well as this, credit cards often come with lower overall borrowing limits, limits to the amount of cash you can withdraw and high fees for withdrawing cash. They’re also a long term commitment, with users sometimes getting addicted to living on credit. Finally, it still costs money to borrow on a credit card.
• Non-Profit Organisations – Another solution, but often a more difficult one, is to find a non-profit organisation that will give you a loan with a good rate. Credit unions are one such organisation. These institutions offer loans at low rates, and they provide loans for emergency situations. You will need to be eligible to join, though, and not everyone is eligible for a loan if they can join. Credit union loans may come with conditions as well.

Representative vs personal APR

If a loan (or another financial product) is offered with a ‘representative APR’, this means that not everyone actually gets that rate. Lenders usually can’t offer the same rate to everyone, so they display a respresentative APR to give an indication of what the actual APR will be. Representative APRs do give a good indication because at least 51% of customers must receive this rate in order for it to be advertised.

A personal APR is the rate you will personally be offered by a company. Your personal APR may or may not be different to the representative APR, based on your personal circumstances.

Compare UK payday loan lender representative examples

Knowing whether to trust a lender – other things to look for

• Are they transparent with information?
  
  

Is the information you need presented clearly? Is it all easily available without you having to dig through the site to find it?

A good lender will tell you everything you need to know without any fuss. As well as simply telling you everything you need to know (interest rates, fees, loan amounts, repayment dates, etc), they should also let you know all this before you have to fill out any forms and identify yourself. This shows that the company isn’t trying to ‘grab’ customers by force. It gives the customer the option to view, evaluate and decide for themself before they’re drawn into the borrowing process.

• Do they answer the phone?
  
  

Don’t be afraid to call a company you’re planning on borrowing money from and speak to the service personnel on the other side. Establishing their levels of courtesy, professionalism, patience and concern for their customers’ needs will tell you a bit about how they conduct themselves. Are they willing to explain how things work and so on? Sometimes there’s nothing better than a conversation with an actual person, even in the online world of today.

• Are their conditions fair?
  
  

Do they treat their customers fairly? Are the conditions they offer acceptable? Are they clear about when you will need to make repayments? Are they clear about how much those repayments will be and what you should do if you’re struggling to make one? Not only should it be clear how the loan process works, but the loan process itself should also be fair. Look for a general guide that you can download in advance. Companies that publish these guides show that they take care of their customers.

• Do they have a loan calculator?
  
  

As we said already, you should be able to see what your options are before you submit an application.

One of the best tools for letting you do this is an online loan calculator. A loan calculator will allow you to see what the repayment conditions will be for the amount you want to borrow. It should also allow you to adjust the borrowing options so you can find a loan that matches your needs exactly. It should display a full payment table, detailing the dates on which repayments will need to be paid, the amount of each repayment installment, the overall total cost of the loan and the amount you’ll pay in interest.

• Do they display their complaints procedure?
  
  

Check out whether the company has an easily accessible complaints procedure. Any FCA regulated business should have a clear and effective complaints handling procedure in place, and they should follow it. You can read about Cashfloat’s complaints procedure here.

For more information on staying safe when borrowing online, check out our free online safety guide.